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Pope Resigns; Papal Resignations; Pope Benedict XVI; Euro Concerns; Currency War Fears; Euro Still Rising; European Horsemeat Scandal; Horsemeat Trail; Papal Frontrunners
Aired February 11, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, HOST: Pope Benedict resigns, making him the first pontiff to do so since the middle ages.
The food scandal deepens. Now Tesco discovers horsemeat in its meals.
And former ECB chief Jean-Claude Trichet tells me that a currency war would be very dangerous, indeed.
Hello, I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.
Good evening. Pope Benedict XVI has announced that he's stepping down as the spiritual leader of the world's 1.2 billion Catholics. He'll become the first head of the Roman Catholic Church to resign in almost 600 years.
Benedict was elected pope in 2005 following the death of predecessor, John Paul II. The 85-year-old pontiff says he no longer has the strength to carry on his duties and he'll leave office at the end of this month.
(BEGIN VIDEO CLIP)
POPE BENEDICT XVI (through translator): I'm well aware that this ministry, due to its essential spiritual nature, must be carried out not only with words and deeds, but no less with prayer and suffering.
However, in today's world, subject to so many rapid changes and shaken by questions of deep relevance for the life of faith, in order to govern the barque of St. Peter and proclaim the gospel, both strength of mind and body are necessary. Strength, which in the last few months, has deteriorated in me to the extent that I have had to recognize my incapacity to adequately fulfill the ministry entrusted to me.
(END VIDEO CLIP)
DOS SANTOS: The pope's announcement stunned just about everybody. His fellow compatriot, the German chancellor Angela Merkel, said that people should respect his decision.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): When Joseph Ratzinger was elected as head of the Catholic Church almost eight years ago, we in Germany were proud of our compatriot, the first in centuries to hold the post of pope. We wish him well for his task.
If the pope himself after thorough reflection has come to the conclusion that he doesn't have the strength anymore to carry out his duties, then this has my utmost respect.
(END VIDEO CLIP)
DOS SANTOS: Well, the Vatican says 118 cardinals will be meeting at the end of this month to choose Pope Benedict XVI's successor. For more on this story, let's bring in John Allen, CNN's senior Vatican analyst, who joins us live from Rome. John, what kind of pope is Benedict XVI going to be remembered as? The man who resigned?
JOHN ALLEN, CNN SENIOR VATICAN ANALYST: Well, Nina, that certainly is going to be, inevitably, a part of this story. He didn't exactly break with tradition. As you know, there are a handful of precedents, but they go back an awfully long way.
So, inevitably, his willingness to step aside, which some will interpret as a great act of humility and responsibility, making way for a new leader. Others perhaps will see it as unfortunate, as abandoning his responsibilities. Inevitably, that will be part of the story.
I think probably the headline about the legacy of Benedict XVI will be this was a great teaching pope, a man who sort of for almost eight years led a worldwide graduate seminar about the relationship between reason and faith and the role of the church in a postmodern secular world.
But while a great teacher, a sort of a mixed bag as a manager. The Vatican was, of course, repeatedly rocked by scandals and crises on his watch. The child sexual abuse scandals, which many critics will say Benedict XVI never adequately got his hands around. The scandal involving the rehabilitation of a Holocaust denying bishop in 2009, that offended many Jewish sensibilities.
And of course, most recently, the spectacular Vatican leaks scandal, which featured the arrest and trial of the pope's own butler for being the mole at the heart of that affair and lifting up an image of disarray and palace intrigue.
I think many would say that Benedict -- was a pope of great ideas who occasionally struggled to make the trains in Rome run on time, Nina.
DOS SANTOS: Well, also, he struggled to get the people onboard as well, didn't he? Because obviously, that came in great contrast to John Paul II, who was more of a pastoral, patriarchal type of pope, if you like. Benedict XVI has always been an academic, an intellectual, a theologian.
ALLEN: Yes. Look, Nina, the basic difference between these two men is that if John Paul II had not been a pope, he would've been a movie star, whereas if Benedict XVI had not been a pope, he would have been a university professor.
John Paul was this larger-than-life, swashbuckling action figure who took the world by storm, whereas Benedict XVI was always a quieter, gentler, more withdrawn and retiring type.
That said, Benedict did have, at times, a surprising popular touch. It is a fact that his regular Wednesday general audiences here in Rome in terms of attendance actually exceeded the numbers for John Paul II.
Benedict, of course, recently made his debut on Twitter. There was even a children's book written during Benedict's years, purportedly authored by his cat, Chico, that came with an introduction from the pope's private secretary saying that everything that Chico had to say was true.
So, even though playing on a public stage was not his natural inclination, there were moments when he was able to project that kind of popular touch. I do think that is certainly one thing the cardinals, when they gather in the Sistine Chapel to elect his successor will be looking for.
They're very interested in trying to relight the missionary fires of the church, appeal to some of those people who have been alienated by it. I think they're going to want somebody who can recapture some of that old John Paul magic.
DOS SANTOS: Yes, that's interesting that you should note. And there are also accomplishments that he managed to achieve. For instance, the first official visit of a pope to the United Kingdom since the Reformation, when this country split from the church of Rome.
John Allen, thank you so much for that. John Allen, there, CNN's Vatican analyst joining us live from Rome. Later on in the show, we'll get the chance to talk about the conclave and what happens from here on.
This has actually happened at least twice before, once voluntarily, and another time under pressure. In 1415, Pope Gregory XII resigned at the request of the Council of Constants to help end a split in the Catholic Church, which was called the Great Western Schism. It took subsequently nearly two years to elect the next pope after that.
And in 1294, Celestine V freely resigned of his own will. He was a hermit who was elected at the age of 80 and, overwhelmed by his office, he eventually called it quits. Celestine was jailed by his successor, though, and even worse, Dante managed to damn him to hell in his famous "Inferno" chapter of "The Divine Comedy."
Pope Benedict XVI became pontiff at the age of 78, the oldest person to become leader of the Catholic Church in almost 300 years. And as Jim Bittermann now reports, the selection came at a particularly difficult time in the church's history.
(BEGIN VIDEOTAPE)
(APPLAUSE)
CARDINAL JORGE MEDINA ESTEVEZ: Cardinal Ratzinger.
(CROWD CHEERS)
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): It is a really astounding choice, and it does set a very clear path for the church, I think.
If there was surprise on that April day of 2005 when 78-year-old Cardinal Joseph Ratzinger became Pope Benedict XVI, it was not without reason.
Vatican watchers had predicted that after the death of Pope John Paul II, a media-savvy and popular figure, the College of Cardinals, gathering in Rome to select his successor, would pick someone like him, a pastoral pope who had a human touch. Or perhaps someone from outside Europe to better reflect the changing demographics of the church.
That they would end up choosing a German who spent most of his career not working in parishes but in the obscure and rarefied world of Vatican politics, shocked some and worried others.
Still, Ratzinger's predecessor and mentor had opened the way for his elevation by naming him prefect of the Congregation for the Doctrine of the Faith, the Vatican office charged with enforcing church doctrine and disciplining the clergy. As such, he was one of the few cardinals who came in regular contact with all the other cardinals.
And John Paul further boosted Ratzinger's chances by naming him Dean of the College of Cardinals, the voters who elect a pope, where he was to guide his fellow churchmen through a process few had ever experienced before.
From the start of his pontificate, Benedict made it clear he was not out to win any popular contests. For decades, he had argued against what he called relativism, a bending of church principles to accommodate modern society.
For Benedict, the church had to stand fast, and if it meant losing Catholics who felt the church should liberalize, then so be it. If the church was smaller, he often said, at least it would be made up of true defenders of the faith.
But at the same time, and somewhat in contradiction, he was faced with a kind of moral relativism of his own. As the pedophilia scandal swept through the church, with priests on both sides of the Atlantic being accused of molesting young men and women, there were claims that Benedict, as a cardinal, had looked the other way or had failed to discipline clergy accused of pedophilia.
As pope, he tightened up the church's laws on sex abuse, toughening the penalties for sex abuse crimes and extending the statute of limitations. But seven years into his papacy, Benedict was still struggling to get beyond the scandal by naming a new sex abuse prosecutor.
And there were other controversies surrounding the pope. As he had before being elected, Benedict insisted that only the Catholic Church could lead followers to salvation, that Catholicism was the only true religion, a claim to exclusivity that upset fellow Christians of other denominations.
And in 2006, he angered Muslims in a speech early in his papacy with a centuries-old quote from an ancient emperor who described Islam as "evil and inhuman." A gaffe for which the pope later apologized.
In his effort to purify his own church, the pope came down hard on liberal theologians and those who wanted to see Vatican II reforms more fully implemented. He made it clear he was against homosexuality and feminism.
But after years of holding the church line opposing the use of condoms, he appeared to be softening his position in 2010 during an interview, in which he said that the use of condoms by people infected with HIV was a responsible act. Later, however, other Vatican officials seemed to contradict the pope by insisting that church teachings had not changed.
Another incident again suggested confusion at the heart of the Holy See in 2012, when the pope's butler was accused of leaking secret documents to the press about alleged corruption in the issuance of Vatican contracts. The butler admitted leaking the documents and was sentenced to jail by a Vatican tribunal, but the pope later pardoned him.
Through all the controversies, Benedict maintained his theological course, fighting against those who were pressing for change in church doctrine, something that delighted like-minded Catholics, but something that dismayed those who still had hopes for the reforms enacted a half century earlier by the Second Vatican Council.
Benedict XVI seems likely not to be remembered with the same kind of fondness as his predecessor, but rather as a figure who brought discomfort to some within the church by strictly adhering to its core traditions and principles, the very thing that brought praise from traditionalists.
Jim Bittermann, CNN.
(END VIDEOTAPE)
DOS SANTOS: When we come back, the risks of trying to beggar thy neighbor. As eurozone finance ministers meet in Brussels, Jean-Claude Trichet, the former head of the ECB, warns against meddling with those exchange rates.
(COMMERCIAL BREAK)
DOS SANTOS: Eurozone finance ministers are meeting in Brussels. On the agenda, a possible bailout for Cypress and the rise in value of the euro. The single currency has actually put on around about 8 percent against the major peers in just the last six months alone. The French finance minister, Pierre Moscovici, says that that's not doing much to help his country's struggling economy these days.
Well, his comments follow Prime Minister -- or the president, Francois Hollande's call for international action to stem the currency's rally. He did that last week.
Well, the Group of Thirty chairman Jean-Claude Trichet has warned against driving down the value of the euro, saying that a race to be the weakest currency could result in catastrophe. It was echoed by the International Institute of Finance, which called on the G20 to intervene to prevent a currency war. I asked the former ECB chief how worried he was about the recent rise of the euro.
(BEGIN VIDEOTAPE)
JEAN-CLAUDE TRICHET, CHAIRMAN, G30: It is very puzzling that in a number of economies, including advanced economies, you have some kind of consensus to think that the weaker your currency is, the better off you are.
Which is untrue, obviously, because if the rezoning is the same in all constituencies, you have nothing but precisely a beggar-thy-neighbor policy, which is a recipe for catastrophe.
DOS SANTOS: Especially at a time when Germany's having a hard time, at the moment, on the export front as well. Do you think that euro should be allowed to weaken, or should politicians keep to one side of the argument.
TRICHET: Well, we are in a world of floating exchange rates. Floating exchange rates means that euro currency and all the other currencies goes up or down, depending on the fundamentals. As you know, the euro area is governed on the basis of a central bank, which has the daily price stability.
But as my successor said, of course the exchange rates are part of the overall analysis of what you should do or not do, taking into account the fact that it has an impact with a number of other parameters on your stability, your price stability.
But again, I think what is very important is that if one single currency area, like the US, and if another one like Japan, for instance, only to take those two examples, are both saying that the weakest their own currency, the better off they are, then it creates a world which is not behaving properly.
DOS SANTOS: Now, your successor, Mario Draghi, has said that the recent appreciation in the euro is actually a sign of a return of confidence in the single currency. Does that tally with your own views going forward?
TRICHET: Well, first of all, I would say the euro as a currency has never been put in question. A lot of people were talking of the euro, the euro is collapsing and so forth. No. The euro never -- was never about to collapse.
The financial stability in the euro area was a problem. The -- I would say credit wealthiness of a number of public signature was a problem, and that's obvious. But not the euro as a currency. So, there is nothing new there. The euro is there, and as a currency is certainly reliable and credible.
DOS SANTOS: Do you think that there's room to cut interest rates from here on?
TRICHET: Again, I have to say that what counts is to be absolutely sure that everybody considers that the anchoring of our inflation expectations around 1.9 percent. I say around that point. As you know, as we say, less than 2, close to 2. But his anchoring remains credible.
If it is necessary for this anchoring to remain credible, to decrease rates, why not? It's a question of judgment of appreciation.
DOS SANTOS: Do you think we're over the worst?
TRICHET: I would say it is no time for complacency. It is no time for complacency, and I just said that in the US and Japan or in Europe, what the central banks are doing should be accompanied by very, very strong message to do the job, continue to adjust as well as possible in the number of countries.
And be sure that the private sector also is putting its own house in order, which I consider is being done. But again, it is not time for any kind of complacency, in my opinion.
(END VIDEOTAPE)
DOS SANTOS: So, there you have it. Beware of the currency war out there. Time now for a Currency Conundrum. Apropos, the subject. The Vatican City's ATMs have one special unique function, and my question this evening is, what is it?
Do they A, dispense special commemorative coins? B, do they offer instructions in Latin? Or C, refuse to dispense cash on Sundays. We'll tell you the answer later on in the show.
Given this, we were talking about the euro rising, it is, I'm afraid, on the way up yet again against the US dollars as those finance ministers gather in Brussels this evening. The British pound and the Japanese yen, though, both down in today's session. In fact, the yen has actually lost almost 1 percent.
(COMMERCIAL BREAK)
DOS SANTOS: French ministers have been holding emergency talks with food safety regulators on the issue of the growing horsemeat scandal. Several French supermarkets have recalled frozen beef products over the course of the weekend, and now Britain's largest supermarket chain, Tesco, says that its spaghetti bolognaise also contained very high levels of horsemeat as well. Jim Boulden has the latest.
(BEGIN VIDEOTAPE)
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Whether it's the mislabeling of packaging or fraud or a genuine health scare, horsemeat is finding its way into frozen food. Frozen food labeled as beef. This time, through he Swedish firm Findus. There are now urgent investigations launched around Europe.
OWEN PATERSON, BRITISH ENVIRONMENT SECRETARY: There appears to have been criminal activity in an attempt to defraud the consumer. The prime responsibility for dealing with this lies with retailers and food producers who need to demonstrated that they've taken all necessary actions to ensure the integrity of the food chain.
BOULDEN: In Paris, the government called in leaders of the country's food industry for a serious chat. The frozen lasagne in question was prepared by French food company Comigel. Comigel, in turn, blames an abattoir in Romania. The Romanian government says "don't blame us." It's getting complicated.
STEPHANE LE FOLL, FRENCH AGRICULTURE MINISTER (through translator): In this procurement system, there are very complicated commercial circuits, which bring traders into play. I've even got the impression that a Cypriot trader subcontracted to a Dutch trader, who then himself subcontracted. And now, we'll get to Romania and Poland. So there, too, is work to be done to get out of this fog.
BOUDLEN: Last week, Britain's Food Standards Agency said Europe's central criminal investigator, Europol, was aware of Britain's investigations, as businesses examine their own supply chains.
DEBORAH HALLETT, @90 DEGREES: An awful lot of the last 20 years, their story to us, the consumer, has been that their excellence in supply chain management is why it is that they can deliver to us the variety, the prices, the consumer availability as and where we want it 24/7. So, to now expect us to believe that they don't have that same level of control in this particular issue is disingenuous.
BOULDEN: The recession has pressured many firms and even many consumers to find cheaper alternatives. Governments are now ordering tests on more frozen beef to see if it is, indeed, beef or cheaper horsemeat from Eastern Europe.
In the UK, food suppliers have a Friday deadline to report if more horsemeat has been discovered destined for, say, hospitals, prisons, and schools.
Jim Boulden, CNN, London.
(END VIDEOTAPE)
DOS SANTOS: One of the problems that the authorities have with this issue is just the sheer complexity of the meat supply chain across Europe. Everyone does seem to agree, though, that the meat issue at the moment in question comes from this country, Romania.
This country used to export live horses to other neighboring nations with an appetite for horsemeat, but the EU actually banned that practice two years ago, and that means that Romania now exports only slaughtered horses instead. In 2011, though, it managed to ship more than 6,000 tons worth of horsemeat.
In this case, the horsemeat that we're talking about was obtained by a Cypriot trader, who then subcontracted the deal all the way up to the Netherlands, and that trader, in turn, sent the meat over to France, which is where it was butchered.
And that happened at the Spanghero factory, which insists that the meat was labeled as beef when it arrived through its factory doors. Indeed, it says it's going to be taking up the matter with its own suppliers.
From France, the meat moved onto Luxemburg, here, to the Comigel factory. This is a company that makes frozen meals for supermarkets and other food companies. Comigel says that it was, quote, "fooled by a supplier," and that it has actually been the victim here in this case.
However, Findus disagrees with that notion. It says that Comigel is actually the villain in this episode, and Findus says that it received a letter from Comigel on February the 2nd which said that horsemeat may be present in its frozen beef meals since all the way back in last August.
While the Findus lasagne here in question may have attracted most of the media attention over the last few days, there have now been recalls from other retailers in places like the United Kingdom, Sweden, and also France.
Now, still to come here on QUEST MEANS BUSINESS, we're going to be taking a look at who might succeed Pope Benedict XVI alongside the latest headlines. Don't go away.
(COMMERCIAL BREAK)
DOS SANTOS: Hello and welcome back. I'm Nina Dos Santos, these are the main headlines this half hour.
Pope Benedict XVI is stepping down. The pontiff announced that he's resigning on February the 28th as the spiritual leader of the world's 1.2 billion Catholics. At the age of 85, he says he no longer has the sufficient strength for the post.
Britain's largest supermarket chain, Tesco, says its spaghetti bolognaise contained up to 60 percent horsemeat. French ministers have been holding emergency talks with food safety regulators on the growing horsemeat scandal. Frozen beef products across the continent have been found to contain high levels of horsemeat as well.
At least 13 people have been killed and dozens wounded in an explosion at a border crossing between Syria and Turkey. Some reports say that it was a car bomb that detonated at the last Turkish border gate before the Syrian territory, but Turkish officials say they can't yet say what caused the deadly blast.
At least 36 people have died following a stampede at a train station in Northern India. It happened during a Hindu festival that attracted millions of pilgrims in the city of Allahabad. Railway officials say that people broke through temporary barriers and crowded onto packed train platforms.
The man who becomes the next pope will not have to mount a public campaign because, of course, it'll be the College of Cardinals that will be electing him, but let's take a look at the few faces that could be in the running here.
First up, Marc Ouellet, who's from Canada. Pope Benedict chose him to head the Vatican's Office of Bishops, which is a major role within the church.
The Archbishop of Milan, Angelo Scola, has also been tipped for a papal candidacy. The 71-year-old son of a truck driver is known for his enthusiasm and charm, and he's also written extensively on finding a solution between the West and Islam.
This man, Cardinal Angelo Bagnasco, is a close friend of Pope Benedict XVI. The 70-year-old has had a meteoric rise within the church, especially of late, and he's been a firm supporter of the current pope. He's also said to be very popular among the cardinals.
And there's Timothy Dolan, the archbishop of New York, who could be the first American pope. At 63 years old, he's considered to be young for the job, but he's become popular within the church community, largely because of his conservative views.
I'm joined now by papal historian Michael Walsh in our London studio to take a look at exactly who could be filling Pope Benedict XVI's shoes.
Good to have you on the show. First of all, what I'd like to gauge from you is what is going through Pope Benedict XVI's mind in deciding to resign for the first time in 600 years we've seen a pope resign.
Could it be what he saw happen to his predecessor, John Paul II?
MICHAEL WALSH, PAPAL HISTORIAN: Well, you know, it's rumored there -- nobody knows for certain. But it is rumored that he advised his predecessor, John Paul II, to resign, that --
DOS SANTOS: Because of ill health?
WALSH: Because of ill health -- because of his ill health, yes. And John Paul II didn't take that advice, though we know he considered it. I mean, that appeared in his last will and testament that he'd actually considered some years before he met his death resigning.
And the -- Cardinal Ratzinger, he was then, actually suggested that publicly that popes could resign. And here we are; he's taken -- essentially taken his own advice. I think the question is why has he done it and why has he done it now.
DOS SANTOS: Because in canon law, we don't have any kind of legislation --
WALSH: Oh, yes, we do.
DOS SANTOS: -- that encompasses an incapacitated person --
WALSH: Oh, no, sorry, (inaudible).
DOS SANTOS: And that was the issue with Pope John Paul II.
WALSH: That's right.
DOS SANTOS: It could have led to a major period of paralysis within the church. So presumably that's why --
WALSH: That's right. The -- that's true, although he has remained pretty well compos mentis. But he -- that's perfectly true. But there is a canon, of course, to allow for the resignation of a pope.
DOS SANTOS: Now for those of us who've covered the conclave last time, I remember being in Rome at the time and I was a correspondent, actually, living in Rome at the time, it was a massive period of change within the church, some felt. But as conclaves go, it was quite short, wasn't it? And this could be even smoother.
WALSH: Well, I don't know. It could be. I mean, how do we know? But it seems to me that there isn't an obviously candidate. You've just run through some of them. But I mean, there are others. There's a lot of pressure for a friend, a Latin American or an African cardinal.
I don't actually approve of that idea. But the -- nonetheless, there is a mounting pressure. And there's Cardinal Maradiaga of Tegucigalpa, who was the favored candidate at the last election. There's a Ghanaian cardinal.
DOS SANTOS: Well, let's run through those options, because there's two issues to bear in mind here. On the one hand, three-quarters of the world's 1.2 billion Catholics live in developing world economies. But then again, two-thirds of the cardinals in the College of Cardinals are going to be voting for them, are from Europe.
WALSH: That's right.
DOS SANTOS: Surely the church needs reform there.
(LAUGHTER)
WALSH: Well, I think it depends on what you think they -- if you think what cardinals are for, I mean, I really think that the -- what they ought to is elect a man who is a bishop of Rome and not elect a pope. I think we -- the notion that we could elect a chief executive of the Roman Catholic Church, which is what, in a sense, people -- the way people think, it's completely wrong.
I mean the church isn't really like that. So the -- people always think we need a charismatic character. But perhaps Rome needs a bishop as a long deceased friend of mine used to say perhaps we need somebody who plays a much less significant role in the life of the church and leaves much more to the local churches to get on with.
DOS SANTOS: So what kind of character do you think, irrespective of their background, geographically speaking and who they would represent in the world, what kind of character do you think they're going to be looking for?
WALSH: Well, they always say the same thing. They always are looking for a holy man. (Inaudible) man as pope. It's just not on. I think one of the -- if you would ask me why did this pope resign, I think the job, in the sense that he was rather suggestive was getting too difficult for him, partly because of his age.
But what was so difficult about it, what was difficult, I think, partly, was the problems within the roman curia, was in the administration of the Roman Catholic Church, it's clearly been dysfunctioning for some time. When he was elected, it was thought that he, who was an old curia hand, would now how to handle it. And that didn't happen.
DOS SANTOS: As I said briefly, what about the priorities here that -- what are going to be the priorities for the next pope?
WALSH: Well, we are living in a divided church. I think there's no two ways about that. And I think the priority, the chief priority of the incoming pope, apart from perhaps reform in the curia, which I think is crying out for it, apart from the (inaudible) reform in the curia, is somehow or another to bring the church together rather than to set it apart.
DOS SANTOS: OK. Historian Michael Walsh, thank you so much for coming on QUEST MEANS BUSINESS this morning and on CNN.
Well, after the break, unhappy shareholders take in Dell, claiming the company's founder is taking it over on the cheap. We're going to be speaking to Maggie Lake for that (inaudible).
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(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Time now for the answer to today's "Currency Conundrum," earlier in the show we asked you what makes the Vatican City's ATMs unique, and the answer is B, they offer institutions in Latin.
Although it is worth mentioning that at the moment its ATMs aren't actually functioning at all because they've been offline since the Vatican fell afoul of the Bank of Italy's money laundering regulations late last year.
(END VIDEO CLIP)
DOS SANTOS: Now Dell is speaking to reassure shareholders that going private is in their best interest in the face of a potential revolt. Well, the founder and chief executive, Michael Dell, wants to buy back the PC maker at a $24.4 billion deal that several major shareholders have made their opposition quite clear, at least in today's session.
Maggie Lake joins us now live from New York to explain the latest.
So there's one particular group of shareholders who say this isn't a done deal at all. Who are they and what do they want, Maggie?
MAGGIE LAKE, CNN CORRESPONDENT: Yes, absolutely the most vocal opposition unit coming from Southeastern Asset Management. And if you've never heard from -- about them, or that name doesn't sound familiar, you would be right. They are not a household name. They're a $33 billion fund based in Memphis, Tennessee.
They are activists. They have a history of that, not like Carl Icahn, but they've been involved in Chesapeake Energy of late and also Olympus from Japan. So they sort of know their way around, you know, making their views known and going against what the board wants if they think it's in the best interest.
And in this case, they do. They say, listen, this is too low, this offer of $13.75. It should be much higher, about $10 higher per share, which should put it in the low 20s. They say there are other things they could do. They could sell off some of the businesses. They could do a special one-time dividend to increase shareholder value. And they're ready to do a proxy fight or a lawsuit to get what they want.
Dell, on the other hand, while not formally responding to Southeastern in particular, they did file something with the SEC, saying listen, we explored all our options. This is the best thing that we can do. They have a 45-day period to take other offers if they come up.
But there doesn't seem to be any other offers or any buyers out there right now, which sort of would reinforce that. So they're going to continue. It's now going to be up to the other shareholders out there to decide which people to side with, Michael Dell and his group or Southeastern.
One thing to mention, Nina -- this is sort of interesting, we may be complicating things, is that 20 percent of Dell's stock, since that deal was announced, is now in the hands of what I would describe as short-term players, risk arbitrage, guys sort of momentum players, who are now in there.
What's their view? Would they maybe hold out and try to lobby for a higher price? We don't know. That's sort of a different scenario that may complication this a little bit, Nina.
DOS SANTOS: Well, what does this say about the relationship that some of these technology company managers have with the world of hedge funds and activists and investors, because it must be really complicated, if you're at the helm of a technology company, where consumer tastes are changing really rapidly. The technology itself is shifting.
And then you've got these guys putting pressure on you. Apple has been suffering that as late.
LAKE: Absolutely. We're definitely seeing an increase in this. I think maybe it says less about technology and more about the performance of some of these funds in both the case of Apple and Southeastern.
These are two funds that are underwater in that particular investment, or at least are losing money, not making the kind of money that they want to and that they get paid big fees to make. Let's take Apple's case, 35 percent share price. David Einhorn has been pushing for them to release some of the cash on their balance sheet. He's lost a lot of money on that. And people pay him not to do that.
So they're pursuing their very particular interests. We are going to hear interestingly from Tim Cook tomorrow. He's going to be addressing investors at Goldman Sachs' technology conference. It happens around 10:15 Eastern time here in New York.
We will of course be following it closely and bring you all that news because you're certainly going to have to respond in some way to what Einhorn's talking about, and some of the decline in the stock price. I mean, a lot of people hold Apple, and they want to know what's going on. Is it going back up? What's your plan? So there's definitely an increase in activism.
But as investors, we all need to pay close attention; all of these groups are talking about their short-term concerns, based on where they bought the stock. It may not be where you bought it. And of course, the companies are trying to manage for the longer term and figure out where their company's going in the future. So very interesting time indeed, Nina.
DOS SANTOS: It certainly is. Maggie Lake, thanks very much for bringing us the latest there at New York's CNN New York.
Well, Facebook users are taking a break -- excuse me -- a report from the Pew Research Center says that 61 percent of them are at some point taking several weeks off from sharing status updates or liking all sorts of things and all the rest. Most are simply just too busy with their own lives, it says, or perhaps even too bored with those of their online friends, (inaudible). Alison Kosik has more.
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UNIDENTIFIED FEMALE: I've considered I need to take a break from this. It's taking up too much time.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT (voice-over): She's talking not about TV nor online shopping, but about Facebook. And she's not alone. According to the Pew Research Center, more than 60 percent of Facebook users have decided to take a break from the social network, sometimes for weeks at a time.
And during the Super Bowl, Americans seemed to turn more to Twitter, blowing it up with tweets about the commercials, the blackout, the Harbaughs.
So is Facebook fatigue setting in? Not according to a group of college students we spoke to at New York University.
UNIDENTIFIED FEMALE: I think it's kind of the standard.
UNIDENTIFIED MALE: I find it easier to coordinate events and also you get a lot more information about your friends.
UNIDENTIFIED MALE: I'm really addicted. Sometimes like I wake up in the middle of the night with like my phone plastered to my face because I go to sleep like on it.
KOSIK (voice-over): Despite its popularity with more than 600 million active users, the company has lost value since going public. Facebook debuted in May at $38 a share, tumbled almost immediately and hasn't fully recovered.
KEN SENA, EVERCORE PARTNERS: I think that it caught investors by surprise to think that Facebook really didn't necessarily have sort of the clear modernization path when they went public, not just in terms of the advertising, but also on the sort of painted side, virtual goods and so forth.
KOSIK (voice-over): Founder Mark Zuckerberg says recent numbers have been better than expected and is confident about expanding Facebook's audience. But one of the company's biggest challenges has been how to make money off its mobile users, a group growing by the hour.
Just last month, the number of people checking Facebook on mobile devices topped the number checking the site on the Web. But mobile ads are cheaper and fewer people click on them. Facebook has rolled out new features like Graph Search and Facebook Gifts. But Zuckerberg said he wants to temper expectations for the new additions.
SENA: I think it's important for them to be able to sort of, you know, evolve the experience for some -- from something where they're trying to push and create demand, to one where they're trying to satisfy demand for their existing user base.
KOSIK (voice-over): Revenue concerns aside, Facebook still has a lot going for it. It's unique. It's ubiquitous and it's only nine years old - - Alison Kosik, CNN, New York.
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DOS SANTOS: Let's have a look at how the weather is faring, particularly in the United States, which has been contending with some really, really difficult weather patterns of late. Tom Sater's at the CNN International Weather Center for us this evening.
Hi there, Tom. What have you got?
TOM SATER, AMS METEOROLOGIST: Well, once again, Nina, second time in two weeks, actually violent weather, tornadoes are no stranger to the Deep South in the U.S. in winter, but they are when they're this strong and create this much damage.
This is the classic comma-shaped storm system, blizzard conditions to the north, rain moving in, of course, with the meter of snow they picked up in the Northeast. But it was the violent weather in the Deep South, tornado warnings, Doppler indicated, circulation, observations, noting that yet there was damage and no doubt about it. We had 15 reports of tornadoes, 55 reports of severe weather.
Mainly, it's just rainfall now. But to give you an idea of where this is, Hattiesburg, Mississippi, just one of several tornadoes. But this is the one that did most of the significant damage. To give you an idea and to break it down on a personal note, you may have, you know, know the name Bret Favre, the U.S. footballer, future Hall of Famer.
Once he retired from the Green Bay Packers, he's now coaching high school football. His high school there, Oak Grove, was destroyed, 230 kilometer-per-hour winds, a path of 95 kilometers. Let me show you some pictures.
You know, this day and age with modern technology, we're getting all sorts and scores of pictures and videos sent into us. This one taken by a professional storm chaser, as you see this, what we call a wedge tornado, most likely on a scale of 0 to 5, this is going to be an EF3. That's very large for this time of year in the U.S. anywhere.
This is the second in two weeks; the last one we had was very close to the CNN World Center, of course, here in Atlanta, just to the northwest, two weeks ago. No fatalities, 200 homes, however, significant damage, 100 apartments, 82 people rushed to the hospital.
To give you an idea of what we're expecting now as we come back to the radar, there is a setup for maybe another storm system. I think we'll have a third one, the first one being the snow. Follow this. So again, significant flooding here.
But if you want to talk about, again, a system that's going to be spreading rainfall across the area, significant rain on top of what they had, of some snow up to the north is causing flooding. And they're still trying to recuperate and try to, you know, blocked roads still from the snow they had in areas of New England.
Here's a powerful storm system. This area of low pressure now, diving into southwestern areas of France, it's going to continue to make its way in the Mediterranean where those abundance of moisture were already going to find some pretty good snowfalls in the Pyrenees, valley rainfall, maybe some minor flash flooding.
Snow is already starting to fall on parts of the Alps. But as we watched the spin with this, the amounts of snowfall on the coast of the Adriatic here could be significant. So to give you a quick idea what you can expect, take a look at some of the numbers.
Zurich, you're going to be approaching 10 centimeters. Sarajevo, just over 7; Zagreb, yes, you're over 10. Again, 27.7 in Vienna, so again, Nina, we're watching a couple different storm systems; all have the potential of really just kind of halting life for some people. But they're picking up the pieces in Mississippi in the U.S. We'll be getting the shovels ready in areas of southeast parts of Europe.
DOS SANTOS: Certainly looks as though they will. Thanks so much for that, Tom Sater there at the CNN Weather Center.
Well, India's richest man says an energy revolution can help spark an economic recovery. Mukesh Ambani is the head of the Indian energy company known as Reliance Industries here. He moved the firm towards gas and oil exploration and with a net worth of a staggering $21 billion here, Forbes actually ranks him as the country's wealthiest man.
Fareed Zakaria sat down with Ambani in Mumbai and asked him why he's so bullish on the chance of a recovery.
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MUKESH AMBANI, CHAIRMAN, RELIANCE INDUSTRIES: Well, I'm more optimistic than most. And my view is that this year we will see the beginning of a recovery, particularly in the U.S.
FAREED ZAKARIA, CNN HOST: And you think that that's because just the inherent strengths of the U.S. economy?
AMBANI: There has been a fundamental transformation in the energy scene in the U.S. For many decades, we have heard that the U.S. will be independent of foreign imports of energy.
ZAKARIA: You've invested in solar. Do you think in the next 10 or 15 years the costs will come down dramatically?
AMBANI: Absolutely. I think so. And I think that ultimately the way I think about energy is that we will transit from what I call a hydrocarbon present, which is coal, oil and natural gas over the next many decades into a fully renewable, sustainable future.
ZAKARIA: You were very bullish about the United States, probably, more bullish than a lot of Americans. What about the other key drivers of the world economy? Because a lot of people say, look, China is slowing down. Brazil has slowed down. India has slowed down. What do you think of the emerging market story?
AMBANI: I think that China is maintaining steady growth. It's not decelerating. Europe has found its own transition path, and they will transgress through the financial system in an orderly (ph) way. India has had some slow growth, but I'm really very optimistic on India.
(CROSSTALK)
ZAKARIA: Why is that? Explain that. Because when people look at India today, they see growth is at 5.5 percent now. You talk to foreign investors and they say the infrastructure is terrible; the government, you know, doesn't do enough reform. It's very difficult to operate in India. You look at all that and you are not - you are not - you're still bullish.
AMBANI: Well, I'm very bullish on India, because it's really the aspirations of a billion people. And ours is a country where all the billion count. There are some countries in the world where one person counts. There are some countries where the politburo, 12 people, count.
The beauty of India is that all our billion people count. And they have aspirations.
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DOS SANTOS: Mukesh Ambani there, speaking with Fareed Zakaria.
Well, the red carpet was rammed with stars last night and for Ben Affleck, it was an especially proud evening. We'll have all the latest (inaudible) from (inaudible) over the weekend, next.
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DOS SANTOS: He called it his second act at last night's BAFTA Awards here in London. Ben Affleck won the best director prize for "Argo," which also took the award for Best Film as well. He won both those titles in this year's Golden Globes. Nischelle Turner joins us now live from CNN Los Angeles with the latest on this.
So Nischelle, with all this success, is it pretty much a given that it's going to get something at the Oscars? Because he wasn't even nominated for Best Director.
NISCHELLE TURNER, CNN CORRESPONDENT: Right. I mean, he's nominated as a producer for the movie, Nina. And that's -- it's interesting. It's really going to be an interesting Oscar night. It shapes up to be a real nail-biter because despite not being nominated for an Oscar in the Best Director category, like you said, for "Argo," he's actually having a heck of an awards season.
His momentum continued actually over the weekend, at the British Academy Film Awards, or the BAFTAs. Now many people consider the BAFTAs as the British version of the Academy Awards. And "Argo" was the big winner at the ceremony. You know, Ben actually -- and he's had several of these, but he had a candid moment on stage during his acceptance speech for this. Listen to this.
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BEN AFFLEC, DIRECTOR, "ARGO": I want to say, you know, that this is a second act for me. And you've given me that. This industry has given me that. And I want to thank you and I'm so grateful and proud. And so I just want to dedicate this to anyone else out there, who's trying to get their second act, because you can do it.
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TURNER: By the way, he's one of the most likable guys in Hollywood. Now that second act that he talks about, it's very interesting because Affleck has had a long career in show biz. He was one of Hollywood's hottest stars as a younger actor. But he had a series of flops. Remember these? "Gigli," yes, "Jersey Girl," yes, "Surviving Christmas," yes.
He also had some personal problems. He visited rehab in 2001 and then his star power really began to fade. And it wasn't until he got behind the camera as a director that things began to change and this, quote-unquote, "second act" started.
He directed "Gone, Baby, Gone" in 2007. Then he followed with "The Town," which is one of the best movies of 2010. And you know, after the success of this awards season, Nina, "Argo's" won Best Picture at the Golden Globes, best ensemble cast at the Screen Actors Guild. We got the Oscars up next.
And like we said, he's nominated as a producer; how did he not get nominated as a director? And the only thing, though, is you know, you wonder if the Academy is going to just go an entirely different way because they overlooked him.
DOS SANTOS: Well, that'll be an interesting turn of events. No, she will bring it to us if it does happen, Nischelle Turner, thanks so much for letting us know the latest on that and putting it into context.
Well, a full week after the stock market action after the break.
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DOS SANTOS: You're watching QUEST MEANS BUSINESS on CNN. The chairman of Royal Bank of Scotland says that the bank's CEO should get a bonus this year. Sir Philip Hampton has been appearing before the U.K. Banking Standards Commission.
British MPs and Peers asked him why more senior executives at the company had not so far fallen on their swords. The bank recently announced a $611 million settlement with regulators who were attempting to manipulate the London Interbank Offered Rate, otherwise known as LIBOR.
European stocks finished mostly in the black as the E.U. finance ministers arrived for their meetings this evening in Brussels. London's FTSE 100 was boosted by strength, particularly in energy stocks and food retailers.
Tesco, the U.K.'s largest supermarket chain, closed up 1.5 percent. That was after an upgrade by the investment (inaudible) Paribas, the latest French industrial production figures limited gains in Paris, though as you can see, the CAC 40 up only about half of 1 percent in the day. But it was the Xetra DAX that fell, being the blackguard among those markets.
And that's it for this edition of QUEST MEANS BUSINESS. Thanks so much for joining me. I'm Nina dos Santos in London.
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DOS SANTOS (voice-over): These are the headlines this hour on CNN.
Pope Benedict XVI is stepping down. The pontiff announced he's resigning on February the 28th as spiritual leader of the world's 1.2 billion Catholics. At the age of 85, he says he no longer has the sufficient strength for the post.
At least 13 people have been killed and dozens wounded in an explosion at a border crossing between Syria and Turkey. Some reports say it was a car bomb that detonated at the last Turkish border gate before Syrian territory. But Turkish officials (inaudible) say they can't say yet what caused the deadly blast.
At least 36 people have died following a stampede at a train station in northern India. It happened during a Hindu festival that attracted millions of pilgrims at the city of Allahabad.
Britain's largest supermarket chain, Tesco, says that its spaghetti Bolognese contained up to 60 percent horsemeat. French ministers have been holding emergency talks with food safety regulators about the growing horsemeat scandal.
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DOS SANTOS: Well, that's a look at some of the stories that we're watching for you closely here on CNN. "AMANPOUR" is next after this.
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